If you've been following the news recently, you've likely seen some headlines discussing the rise in foreclosures in today's housing market. This might have left you feeling a bit uncertain, especially if you're thinking about buying a home. But don't worry, it's crucial to fully understand the background of these reports to get the real scoop on what's actually happening in the market right now.

Here's the scoop: ATTOM, this property data provider, recently released a report that says foreclosure filings have gone up by 2% compared to last quarter and 8% since this time last year. The media is making a big fuss about it, which might make you think that housing prices are gonna take a nosedive. But hold up! The truth is, even though the numbers are going up, it doesn't mean we're heading toward a foreclosure crisis or anything.

Let's check out the most recent info and put it in perspective. This way, we can see how it stacks up against previous years.

It Isn’t the Dramatic Increase Headlines Would Have You Believe

Guess what? The number of foreclosures has hit rock bottom in recent years. It's all thanks to the forbearance program and other helpful options that came into play in 2020 and 2021. These initiatives allowed millions of homeowners to keep their homes and recover during a tough time.
But that's not all - as home values started shooting up, many homeowners who might've otherwise faced foreclosure were able to capitalize on their equity. Instead of facing the scary "F" word, they sold their houses and got a better deal.
Looking ahead, the power of equity is going to continue saving the day. It's going to be a significant factor in preventing foreclosures and helping folks stay afloat. Good news all around!

As the government's moratorium on foreclosures ended, we were prepared for an increase in foreclosures. But don't worry, just because foreclosures are going up, it doesn't necessarily mean the housing market is in trouble. As Clare Trapasso, the Executive News Editor at Realtor.com, puts it:

““Many of these foreclosures would have occurred during the pandemic, but were put off due to federal, state, and local foreclosure moratoriums designed to keep people in their homes . . . Real estate experts have stressed that this isn’t a repeat of the Great Recession. It’s not that scores of homeowners suddenly can’t afford their mortgage payments. Rather, many lenders are now catching up. The foreclosures would have happened during the pandemic if moratoriums hadn’t halted the proceedings.”
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— Clare Trapasso, Executive News Editor at Realtor.com

““In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes. Lenders weren’t filing default notices during the height of the pandemic, pushing foreclosures to record lows in 2020. And while there has been a slight uptick in foreclosures since then, it’s nothing like it was.”
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— Bankrate

Well, the thing is, we're not really expecting a sudden surge of foreclosures or anything like that. What's happening is, some of the increase we're seeing is because of the delayed activity I mentioned earlier, you know? But a good chunk of it is actually due to the economic conditions we're currently facing. So, it's not like there's a big wave of foreclosures hitting us all at once. It's more of a combination of different factors that are contributing to the rise in foreclosures.

You won't believe how much things have changed since the housing crash! Just check out this graph below. It shows the number of foreclosure filings for each year since 2008. Can you guess what it tells us? Well, it's pretty clear that foreclosure activity has been way lower ever since the crash happened. Quite a remarkable difference, don't you think?

While foreclosures might be on the rise, it's important to note that the current foreclosure situation is nowhere near as severe as it was in the past. I mean, today's foreclosure numbers are way lower compared to those crazy record-breaking figures we saw during the housing market crash. It's definitely a different ball game now.

You know what? One big reason for that is because buyers these days are a lot more qualified and way less likely to default on their loans. And hey, that's not all - it's also because of all the factors we talked about earlier. So, it all adds up to the fact that buyers today are in a much better position overall.

Bottom Line

These days, it's really crucial to make sense of the data. The housing market is going through a period where foreclosures are increasing, but don't worry, it's not even close to the level of crisis we saw when the housing bubble burst. So, there's no need to panic about home prices crashing anytime soon.